Tue, May 01, 2018 - Page 10 News List

China gives little sign of slowdown as PMIs hold

Bloomberg

China’s economy is giving little sign that a slowdown is approaching, with services strengthening and manufacturing remaining robust.

The official manufacturing purchasing managers’ index (PMI) stood at 51.4 last month versus the 51.3 estimate in a Bloomberg survey and 51.5 in March.

The non-manufacturing PMI, covering services and construction, rose to 54.8, the Chinese National Bureau of Statistics said yesterday, beating estimates.

In the face of persistent threats to the trade outlook from a dispute with the US and the effects of a credit clampdown, policymakers have expressed fears that the economy could slow more sharply than the cyclical moderation that is already anticipated.

That said, a cut in the amount of funds that lenders must park at the central bank has buoyed markets, and a mission to China by US trade officials in the coming days might ease tensions.

“We believe the government will manage the situation well and won’t let a trade war take place,” said Shen Jianguang (沈建光), chief Asia economist at Mizuho Securities Asia Ltd. “Domestic consumption is also resilient, and only investment — local government investment in particular — has slowed a bit, and that’s aimed at controlling debt.”

A gauge of new export orders edged down to 50.7 from 51.3, though remained broadly in line with readings over the past several months. New orders also slipped to 52.9 from 53.3.

Input prices decreased slightly to 53. Inventories of finished goods, stockpiles of raw materials, backlogs of work and employment all remained about in line with prior readings.

“The numbers are pretty solid,” Zhu Haibin (朱海斌), chief China economist at JPMorgan Chase & Co in Hong Kong, said in a Bloomberg Television interview. “This news suggests growth momentum is still fine,” though risks still remain, he said.

The bureau cited steady production growth and stable demand, according to a statement released with the data.

It also said that high-tech manufacturing remained robust, with a gauge for that sector rising to 53.8 amid gains for pharmaceuticals, special equipment manufacturing, and computer, communications and electronic equipment.

The steel industry PMI also increased, climbing to a five-month high of 51.7 as gauges of new orders and export orders expanded from a month ago.

The data suggest a recovery in the sector as prices rebounded amid falling stockpiles.

Economists surveyed by Bloomberg forecast full-year growth of 6.5 percent for this year, a substantial slowdown from last year’s 6.9 percent performance.

That is still in line with official targets, and policymakers are de-emphasizing numerical objectives as they push to strip out financial risk.

“The economy is facing a bit of downward pressure,” said Zhou Hao (周浩), an economist at Commerzbank AG in Singapore. “A lot recent macro data suggest a little bit of a downward trend, but in general PMI is holding up. Sentiment is stable.”

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